Cathay Pacific dropped from Hong Kong index

HONG KONG: Hong Kong’s struggling flag carrier Cathay Pacific was removed Friday from the prestigious list of companies that make up the city’s benchmark index.

The removal from the Asian financial hub’s Hang Seng Index will take place from December 4, the Hang Seng Indexes Company said in a statement late Friday.

The company has been on the index since 1986.

“It a very negative news, especially not many people were expecting it will be taken off at this point,” financial analyst Jackson Wong told Agence France-Presse.

“I think because other newcomers are performing so strongly, then they had to do that,” Wong of Huarong International Securities said.

Cathay Pacific in March posted its first annual loss since the height of the financial crisis following “intense competition” and a drop in demand from business travellers.

The results came as companies like China Eastern and China Southern Airlines were offering direct services to Europe and the United States from the mainland, while budget carriers like Spring Airlines were providing regional routes, undermining Cathay’s once critical Hong Kong hub.

The airline has seen its market capitalisation cut by almost half in the past seven years, Bloomberg News reported.

State-owned Gulf carrier Qatar Airways said Monday it had acquired a 9.6 percent stake in Cathay, making it the third largest shareholder in the Hong Kong-based airline.

Qatar Airways group chief executive Akbar Al-Baker said in a statement that Cathay was “one of the strongest airlines in the world”, adding it had “massive potential”.

Shares in Cathay will continue to trade on the Hong Kong stock exchange after its removal from the Hang Seng.

The statement from Hang Seng Indexes said it also removed Kunlun Energy, an arm of PetroChina.